My gut tells me it won't and I have to consider that this plan is now top heavy for the 2008 year. Thoughts?

We have a plan that has two subrogation clauses. One was in effect when the initial claim came through and the current one was in effect when the matter was settled. The terms do not clearly state which clause to use. Does anyone know of any guidance or general practice on how to handle this?

A Doctor's practice shut its doors in February and all of their employees work for a hospital now. The Doctor’s whom are owners of the orgainzation do as well. The practice is still collecting receivables from their pre-Hospital service, thus the doctors are still receiving compensation (W-2). There has yet to be an establishment of a termination date in the form of a resolution or amendment as the practice is just now beginning to "wind things down."

The Doctors are still handling "administrative" issues related to the practice, but are no longer performing medical practices. The work they are doing relates to paying old bills, collecting receivables and winding down the practice.

Issue 1: Termination Date:

When talking about prorating limits is there anything to stop me from using (for example) a 12/31/2011 termination date, thus avoiding proration? Or is there some date where the IRS could argue, "OK, you're monkeyhing with the rules here to avoid proration."

Issue 2: Post-severance compensation

I am also concerned with w-2 wages paid after May 15 (which is 2.5 months post transfer). When does my 2.5 month clock start ticking?

My spouse underwent bowl obstruction surgery today (all went fine). The surgical procedure took 45 minutes. What are the chances of completing a DB 5500 (large plan) in 45 minutes, including filling out the form, the CYA, and navigating the DOL website?

Another Gateway question(s):

I have two separate definitions of Plan Compensation (i.e. compensation on which the plan allocation is based) in my Controlled Group:

Plan #1 -- Total pay earned for period of the year in which employee was a participant in the plan (1-year eligibility period)

Plan #2 -- Base pay earned for the entire year (immediate eligibility)

For Testing puposes, I am currently using total pay for the entire year for all participants in the aggregated plan. The plan is failing the minimum allocation gateway test, so as of now I am calculating the required gateway contribution based on total pay for the entire plan year.

My questions are:

1.) Can I base the gateway for Plan #1 on Earned-While-Eligible pay? I assume if I do, then I would also have to use this defintion of compensation in my General Test. Sinc this will only improve results for that test (as it will result in higher accrual rates for a group of all NHCE's), that will not be a problem.

2.) Can I base the gateway for Plan #2 on Base Pay? I'm guessing this is a No, unless I can somehow use Base Pay as my Testing Compensation. Which leads to my third question....

3.) Can I use Base Pay as my Testing Compensation if this definition of pay is deemed non-discriminatory using the compensation percentage test?

4.) If #4 is Yes, does that mean I have to use Base Pay as the Testing Compensation for the entire Aggregated Plan (including Plan #1)?

I tried searching and I'm sure this has come up before, so please humor me.

On what dollar amount is the RMD calculated in the year of divorce when 1/2 was transferred to the ex-spouse pursuant to the divorce decree?

Example: 12/31/10 value was $2,000,000. Divorce takes place 3/1/11 and $1,100,000 is transferred to ex-spouse (1/2 of FMV). This leaves $1,100,000 for IRA holder.

Thanks in advance.

I am allowed to run separate gateway test for Otherwise Excludable Employees? I know for Component plans the answer is No. But I'm hoping I can exclude a large number of 2010 hires from having to receive a gateway allocation for a plan that is failing (even though some of these employees did receive an allocation in 2010 as part of a plan with immediate eligibility).

Hi All,

We have been getting into some debate over the "special extension" box on the new 8955-SSA. Does anyone know if the January 17th extension needs to be noted? Also, can we call it the "IRS takes too long issuing forms extension" or is that too long.

The first question is serious, obviously the second is not. Any help would be greatly appreciated.

Thanks!

Anyone tried to transfer a plan out of TIAA? We;re aware of the tiaa-traditional account and the 10 year surrender period, but I was wondering about those plans set up with "RA" contracts, versus GRA contracts. Am I correct that there's really no way to transfer existing RA money because it is a contract with an individual?

A client of ours sent us an 18 page survey they recently received from the GAO. The survey title is "SURVEY OF 401(K) PLAN SPONSORS FEES". The survey is very detailed and specific to investment and plan fee information. It does not appear to require a response as there is no Due Date. Has anyone else learned of this?

Client wants to terminate its profit sharing plan. However, there are several years where there were testing problems that have to be corrected under EPCRS. They want the termination effective 10/31 (the end of the upcomong plan year). Can you submit the Form 5310 with the voluntary compliance submission similar to what you do with the Form 5300? I assume the approval of the voluntary compliance submission and the determinatino letter will take more than a year. Is the audit still required with the Form 5500 after termination?

Client (Husband/wife) hired an employee who probably never become eligible due to minimum hours. Do I have to switch now from preparing an EZ to a 5500SF because of this ineligible employee? Thanks for your help.

A current client has just posed a question on some pretty str ange facts.

This person acted as plan administrator of a small (less than 30 participants) company 401(k) at a former job. The former employer is now being dissolved, and the 401(k) at issue (a prototype document) was terminated in 2004.

Also in 2004, prior to plan termination, however, the mistress of a former/terminated employee with serious mental health issues presented a Power of Attorney in connection with the former employee's request for payment of his benefit (amount was just under $2000). Plan administrator paid the benefits to her (!). Note that former employee was married. (QJSA is not applicable).

Employee has since died. His widow has now contacted the former plan administrator to ask where the benefit it.

I'm trying to gather more information to see if plan document had a provision permitting payment to a power of attorney in the event of incompetency (but am still worried that he wasn't legally incompetent). Sure looks like an improper distribution to me.

The client is asking if he should tell the widow (1) that the amount was paid to the mistress, and (2) the mistress's name.

My bigger concern is his personal liability for making a wrongful distribution.

Still trying to gather more info, but wow. Any suggestions?

To me the options appear to be (1) try to get bankrupt company to pay the widow the benefit amount, (2) say that amount was paid to decease husband in 2004 under terms of the plan (omitting mistress detail - and thereby avoiding liability for any resulting violence, etc.), or (3) doing a John Doe EPCRS application for IRS guidance on proper correction.

I suspect client will prefer to try to take the position that distribution was properly made to employee. But if the wife were to get the full story and go the DOL, I don't see how he avoids liability, other than by standing behind a plan provision (that I hope exists) permitting payments to be made to a power of attorney.

Don't see facts like this every day....

Does anyone have a IRS Trouble Shooter number available? In a Kafkaesque situation from hell with a bogus late filing. We sent followup letter in May (started in February) where client had paid the erroneous penalty. They just received a letter providing credit for the erroneous payment, then a second letter adding the penalty back. God help us when the IRS has to start tracking Health Care coverage in 2014.

We have a governmental 401 P/S FICA Alternative Plan with mandatory pick-up contributions of 7.5% of compensation. Plan wishes to allow participants to take distributions on account of a serious financial hardship. In order for an employer to avoid FICA tax liability, its FICA Alternative Plan must satisfy certain design and benefit requirements. A FICA Alternative Plan:

-must provide a benefit of at least 7.5% of compensation;

-contributions must be credited with a reasonable rate of interest; and

-benefits must be 100% nonforfeitable

In reviewing Treas. Reg. §31.3121(b)(7)-2 and IRS Publication 963, I was not able to determine if such distributions would be permitted under such an arrangement.

Do you know of any reason why such distributions would not be allowed?

I think this plan needs to file a 5500, but I'm hoping someone tells me differently. First year plan is effective was 2009. The only contributions for that year were elective deferrals made at the end of 2009 and not deposited until first few days of 2010. The CPA did not file a 5500 for 2009 under the theory that there was no money in the plan, so no need to file. I want to say that there is an asset and that is the deferrals receivable and a 5500 should be filed. Which is it?

We have a controlled group of 3 companies.

Fiscal and 401k plan year end is Oct 31

Bought a new company with an existing Profit sharing plan – fiscal and plan year end is Dec 31

The new company will be an adopting employer of the parent company. Can we keep at Dec 31 plan year or need to change to Oct 31? Thank you

My nephew just turned 18 and is headed to the university this fall as a freshman. As part of his financial aid package he'll work part-time on campus and be issued a W-2 at year-end. Maximum earnings are $3000.

Is he old enough to start a Roth IRA all on his own? Could he contribute all $3000 of his earnings?

In the case of a trustee who embezzled from his employer, and contributed some of the embezzled funds to his 401k account, once the court order is issued convicting the trustee, how does the plan distribute this? Is court order sufficient for the vendor to cut a check to the employer, or does the convicted participant have to sign off this distribution?

Any help would be great!

A client contacted us while looking at their 2010 return and noticed that their EIN was wrong, ok fine we will fix it. We then look back and see it has been the same EIN on all returns that have been filed since the plan started in 2002!

So, amendments are in order for the past 8 years. Am I understanding the instructions correctly that I use the 2010 forms for all of the amendments, inserting the correct plan years at the top? They all have to be filed using EFAST2, right? The EFAST website is not very helpful regarding this topic.

Is there anything else I should be aware of?

Thanks!